We need to rely on our own natural wealth rather than on foreign investment. (Gerard Rennick)

Central Banks are part of the problem not the solution.

The most misunderstood Government tool of all is monetary policy.

In fact it is so misunderstood it has actually been outsourced to unelected bankers who decide upon one of the most important decisions a government can make which is the price of money.

Even worse than that there is another monetary tool that the government can use, but it outsourced to foreign central banks, and that is the volume of credit in the system.

All of you quite rightly don’t like the idea of foreign social media companies regulating free speech, yet no one gives a rats that foreign central banks control how much credit is in our banking system.

This matters because if not regulated, asset prices decouple from earnings and instead are priced by capital inflows.

We have seen this with housing. In 1985 Paul Keating lifted capital controls which meant that the RBA would no longer regulate credit. At the time the four major banks had $8 billion in foreign debt. By 2008 they had almost $800 billion in foreign debt. Most of this money was lent against housing which drove up house prices but not incomes, creating a problem for future generations who couldn’t earn enough to buy a house.

The GFC maxed out the credit of the private credit system so Kevin Rudd allowed parents of foreign students to buy houses in Australia. Hence the Student immigration ponzi began to fund the sale of houses to Immigrants rather than our children.

The PeopleFirstParty.au will regulate credit in a productive manner using equity and not debt through the creation of an infrastructure bank.

There are two forms of credit - Debt and Equity. Because of neoliberal propaganda, people have been brainwashed into thinking Governments can’t issue their own credit and instead just accept that the Australian government had to fund itself from foreign debt.

Nothing could be further from the truth. As a sovereign country Australia has title over all the wealth and untapped wealth. This is equity and as such the Government should set up an Infrastructure Bank to fund the development of the untapped wealth so the profits remain in Australia.

The key point is that the credit is secured against an asset instead of being unsecured which is currently the case.

The Infrastructure Bank will issue credit against the sovereign seven - Dams, Power Stations, Roads, Rail, Airports, Ports and Telecommunications.

This means that rather than repaying offshore debt that is used to build a dam, the profits are kept here in Australia.

Not only will this reduce taxes, it will provide essential services, lower the cost of doing business and ensure Australia’s wealth remains in our hands.



[Posted at the SpookyWeather2 blog, November 13, 2024.]